Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

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Non-Compete Clauses: A Live Case Study

Sand

Publishers are terrified of simultaneous releases. Their contracts are saddled with non-compete clauses that prevent authors from “publishing too many books.” Meanwhile, readers are clamoring for more. And most authors can write quicker than they are allowed. This is a policy that helps absolutely no one and hurts absolutely everyone, publishers included.

If more business majors worked in publishing houses, they would know that four gas stations at the same intersection all make more money than the same four stations spread across town. Lowe’s goes up down the road from Home Depot. There’s spillover. And you know what part of town is a great place to get gas.

Here’s a case study for the ridiculousness of non-compete clauses. My novel SAND released on Saturday. My Kindle Worlds fan fic story PEACE IN AMBER hit today. No major publisher would do this. They would sue an author for doing this.

PIA

SAND is a mere $5.99 for a full-length novel, full of original artwork from Ben Adams and graced with a sublime cover from Jason Gurley.

PEACE IN AMBER is a mere $1.99, and it’s the first time I’ve tackled the difficult task of writing about my 9/11 experiences.

Both are currently #1 in their respective categories on Amazon.

This makes me happy, less because of the success of these works and more because you have spoken. You are speaking right now. The publishers are wrong. You are looking for something to read, more than just one thing. And you’re happy not to have to drive clear across town to get it.

30 replies to “Non-Compete Clauses: A Live Case Study”

I should also note that there aren’t live links in either book pointing to the other. And no paid advertising for either book anywhere. This post is the only place I know of where both works are mentioned simultaneously (maybe an interview somewhere as well).

I should also admit to being terrified of the results of doing this. Putting your money where your mouth is isn’t easy. Part of me feared publishers are right. The rest of me knew they aren’t.

This is similar to the case I made last year for releasing the paperback and hardcover of WOOL at the same time. Simon & Schuster, one of the more flexible and awesome of the Big 5, agreed. Both editions hit the New York Times list. WOOL was on three lists, in fact: The ebook list, the paperback list, and the hardback list. I’m not sure if that’s ever been done before. But only because no one else was foolish enough to try.

Experiment, pubishers. Don’t assume. Try.

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This is an excellent read. It was so telling to read that your book written in Vonnegut’s world “Osage Two Diamonds”, while it dropped from the #1 spot to #2 upon Hugh’s entry of “Peace in Amber” (he’s such a jerk), that sales of OTD increased. If the Indie world of authors is full of guys like you two, what a rocking world. Death to the non-compete clause.

If you publish a book a month, I’ll buy it because you’ve proved that you write interesting stories. I wish Orson Scott Card was on the same publishing schedule as you. And Gaiman. And about half a dozen others.

Blaze that trail, man!

One of those things I don’t have to worry about self-publishing.

I’ve faced “No Compete” clauses in contracts before, usually when leaving a company. I only ever signed one. The others I simply ripped in half when they refused to compensate me for each year stipulated in the contract.

In my opinion, unless I’m being compensated for my losses due to the non-compete clause, there is no contract. So for publishing a book? Well, if the publisher also agrees to a “no-compete” clause and publishes no other authors while they are pushing my works, then it’s a go! (If they aren’t going to agree to it, why should I agree to such a thing?)

Love it! I think that goes back to the old axiom about never negotiating from a position of weakness. If I feel the publisher is my ONLY ticket to a published life, then I might HAVE TO do what they want. One of the beautiful things about the Indie shift is I simply don’t!

I just have a calendar on the wall. At the beginning of the month I select dates I want to shoot for to release books. Sometimes I hit them, sometimes not. Sometimes I release later, sometimes earlier. No one’s really waiting on me so I have the freedom to do this.

Best strategy? Well for me it’s just a stimulus to work and try to reach that date, which usually means I get more done each month. Kind of like tricking your mind into believing you have a firm deadline when in reality it doesn’t even exist to anyone but yourself.

I love this! I have reading ADD. It’s not just because I get bored with any particular book, but just because my moods shift daily. One day I want to be reading Fantasy, and the next I want to be reading a Horror novel. It’s not that any one particular book has lost my attention it’s just that my attention span is random and wide spread at times. I love to read several books at one time. How do I keep them separated in my brain? Well I can’t exactly answer that, but I just somehow do! I love that you don’t put a limitation like this.

I’ve never understood their theory on this. For me, if I find an author I like, I immediately look them up to see what else they have out I might like. You’d think they’d know this increases business rather than hurts it.

I appreciate hearing what you have to say, I had no idea about any of this! Hopefully your success sheds light on the issue and argues for change.

Isn’t the self punishing revolution great. Gone are the days of my youth of being told you could write but you would be very unlikely to ever get published! Not that I ever understood that. You only had to go to your local bookstore to see shelf upon shelf of lucky authors! And Hugh seems to be our spokesperson and ambassador for pushing for change and proving it can work! Go Hugh! I can but hope that my ramblings turn out half as good as Wool (I’ve not read anything else, yet)

I never did get that philosophy or plan to release slowly and delay, delay, delay. As a reader, I lose interest in waiting for a next release and sometimes am too long gone to see it coming out. Avid readers are hungry for good books, so why not give them what they want? Seems kind of simple on its face to me. :) I’m so glad you persuaded S&S to follow your plan. Now they see that it works! Hopefully, others will follow.

My nine-year old daughter is a ferocious reader. She typically reads 3 or 4 books at a time and never has a problem keeping the story-lines straight. Me? I can only do that with 2 or 3 books at a time. But serious readers have no trouble juggling books. We like having several books on our nightstands from which to chose.

I couldn’t agree more with this. It’s a lot like when the music industry was having to accept the same kinds of changes. The gate keepers fought it furiously, and many artists did too. I understand music sharing without permission was and is a huge problem, but that battle was over when the first person figured it out. I actually bought more CDs during that time than any other, because digital music was hard to come by honestly and I constantly discovered new music. I remember thinking “I’d really like to pay for this, but you won’t let me!”

Meanwhile the artists who got it were figuring out how to reach out and connect more directly with their fans. My clearest experience was with Nine Inch Nails, easily my favorite band. We as fans got a bunch of amazing new music in a creative burst from them, released when they wanted to, not on the company’s schedule. We also learned about several new artists because they were working together, either live or in studio. And yes, I downloaded the music for free, bought the CDs, bought the CDs for other folks, and went to several unforgettable concerts. Who’s not getting a good result there?

The same thing happened just now. By reading this blog post, I followed to read Michael Bunker’s post. Oh, look, he has a Vonnegut story too! (click purchase) Oh look, there’s a collected set of dystopian fiction from other indie writers! (click purchase) So, I now have a bunch of one of my favorite genres to read for less than the cost of a traditionally published paperback. The writers have a bit of income. I have discovered more writers, and guess what? If I enjoy what I read, I’ll be looking at their previous work and the work they do in the future. Again, who’s losing in this scenario?

Well, I suppose the traditional media companies will continue to lose until they get it.

Peace.

Wow, I never ever realized before that Hotelling’s model could be applied in time too… And that’s exactly what you did here, sir! Do you happen to be a closet economist? :)

It doesn’t really have anything to do with readers; it has to do with license rights in territories and booksellers. It’s the big book vendors who lay down law to publishers in terms of what they are willing to order and display. (And this includes Amazon.) The big vendors don’t want to deal with multiple front-list titles coming from one author, depending on what type of fiction it is. (If you are publishing non-fiction Chicken Soup for the Soul sort of stuff, you can have as many as you want.) Publishing and book-selling, even for e-books, is built around a one new front-list fiction title (which is heavily discounted and doesn’t make that much money,) sold with back-list titles, which sell because of the noise about the front-list title and make the real money. That’s multiple titles selling for the author and a preferable set-up for the booksellers, who often agree to a large first order of the front-list title and lose money on the discounts to get people into the store and sell the backlists.

If an author has more than one front-list title, it means that they are losing twice as much money on the discounts for only one author with one backlist. More, such books have to be advertised in store and in media as coming from the store. Booksellers get publishers to cough up all or half of the money for this — co-op advertising. If there are two front-list titles, then that’s less money per title to do the co-op advertising on which booksellers depend. They don’t like that. They want one front-list title to promote and time to sell the back-list editions that they have too. Having two front-list titles from one author is not necessarily a bad thing, depending on the market for the particular type of fiction, but it can be problematic and it effects how much they order and how they use the order for leverage. And those orders are critical to the publishers. Even if the booksellers agree to order large amounts of both of the author’s front-list titles, they may then turn around and say that to compensate, they’ll order less of the publisher’s other titles. Publishers want their bestsellers to sell, but they also want to move their other books into bestseller range.

If an author has more than one front-list title coming from more than one publishing house, that’s not impossible but not desirable necessarily, since then the big booksellers have to negotiate terms with multiple houses and hope all those houses will be able to do returns, discounts, pay for shipping or e-formatting, etc. the way that they need. They may turn around and tell one publisher that they aren’t going to order much of the second book and will concentrate on the first. Then the second book license holder loses out unless the second book catches enough buzz with readers so the booksellers will change their minds. Which it may or may not — each title from a bestseller doesn’t necessarily sell at the same rates. This problem also exists if one title is coming from a partner publisher and the other is coming directly from the author, especially as the author has more limited resources for terms than the publisher.

That being said, many authors do have more than one title coming out a year and often from more than one press, often in different countries at the same time and all of those editions available online. In SFFH, it is especially common, as readers will buy a fair amount of material and authors often have multiple series. For instance, Charlie Stross puts out about two books a year, plus puts out shorter works for sale as e-files through Tor.com. And serial publishing — taking three books in a series say and publishing them every three months — is a common practice in SFFH publishing. (It can be easier if the author has one series that is say science fiction and another that is fantasy or suspense or romance — that frequently means a double release.)

But for publishers, it’s a case by case basis as the problems can be manifold. If they put out two new frontlist titles from the same author but not the same series, for instance, not only are there the large increased promotional, production, and marketing costs, but the author may spend more time marketing one than the other, undercutting the sales of the second. That means the license they paid for the second book is worth less than they paid for it. Further, if one of the books sells less than the other — which often occurs, that messes up the numbers with computerized systems booksellers use such as BookScan. It can make an author with a book that is selling look less successful because the other one is slower to move, which will then when the author writes a new front-list title, mean that the booksellers order less. This can happen also if you do one at a time, but one at a time means publishers can make a concentrated effort and co-ops ads to try to get the book moving and less of a penalty from booksellers.

If the author is self-publishing another title or has another title with another publisher out at the same time, that can again sabotage efforts the publisher is making for their book, depending on what is happening with booksellers and ordering, pricing, promotion, etc. If you’re selling e-books on your own, the vendors you sell through can do all sorts of things that mess up their selling efforts. They can’t control what you do or don’t do, and certainly what other publishers you work with do. When you make a licensing agreement with the publisher, you are promising them an exclusive license and that you will help them with that license, not sabotage the value of the license they have paid for. But basically, the publishers don’t trust you to hold up your end of the bargain necessarily. Hence, the non-compete clauses to secure the value of their license.

Those non-compete clauses can be refined or sometimes removed — it depends on what sort of deal is involved. For an author who is just coming in with an original work, the non-compete clauses the publisher wants may be minimal. But for a reprint deal, they’ll want more assurances that you won’t try to sell your books behind their back and lessen the value of the license. With the different business factors in the e-book market, both publishers and authors (and their agents,) are engaged in long term negotiations about how the business is going to work and how to keep either side from welching, one contract at a time. If your agent gets a good deal for you on a non-compete clause, then the agent can then apply or attempt to apply those terms to all her other clients who do deals with that publisher as precedent, which begins to shift the terms of deals. (Your deal with S&S certainly helps do that.) If the publisher is making a deal with a new or mid-list author, there may not be a lot of concern about the author working with other authors or self-publishing. The money involved is less, the booksellers aren’t demanding massive co-op advertising and special terms, etc. If the author is a bestseller, and if the author is a self-publishing bestseller, then it gets a lot more trickier for them.

The e-print self-publishing market (as opposed to the much older paper print self-publishing market,) is dealing with a very different set of business factors. Those authors have found marketing success by flooding the market with product. How do you stand out from millions of other self-published titles? Form a cluster of titles on which readers can gorge, then hope for word of mouth. Amazon and other e-book vendors impose their own version of non-compete clauses on these authors. The authors can sell as many titles as they like, but they better not try to sell them for less on somebody else’s site. The vendors, who have an electronic license to your book for their platform — that they did not pay for — will simply drop your book price to whatever you have it elsewhere, so that you don’t sabotage their vendor electronic license with you by giving another vendor a better deal (which is what the publisher fears as well.) They have that non-compete clause and computer programs to back it up.

These vendor booksellers also aren’t necessarily insisting that you provide them with co-op advertising money, discounted prices, returns and free shipping of them if you do print editions or other terms that they are doing with publishers. Whether you sell much or not, they make money off of you, especially if they sell other products than books that you and your friends will buy. If you sell your books for free on their site, it’s still free advertising for them. But with publishers, they make their money differently and the business factors and terms are different. So a lot of self-published authors who have managed to get reprint or new deals with publishers are confused. Why don’t the publishers do business like they did business? Because the way that market is set up with vendors, they can’t. It’s a different business relationship.

Publishers do put out multiple editions of books at the same time. A hardcover/trade paperback simultaneous used to be fairly popular for certain kinds of books. E-books either come out at the same time as the book, or if they are big sellers coming out in hardcover, slightly behind the hardcover. Nor is it unusual for a bestselling author to have two-three editions of one title be all on the bestseller lists at the same time, since a bestseller’s new title may sell for an extremely long time. Sometimes all three editions are of a backlist title, meaning the author has a backlist title in three editions on the lists at the same time that he has a front-list title in hardcover on the list. When Paulo Coelho’s The Alchemist became a big thing, he sat on all three print lists for like a year. (Which is a publisher’s wet dream.) When the movie of Wool comes out, you will again be on the bestseller lists in hardcover, paper and e-book, probably with a nice tie-in cover edition for some of them.

But it’s a case by case basis. For bestsellers, publishers are trying to make launches an event, like a movie release date, which means working with booksellers (including Amazon,) and dealing with their terms and orders on the roll-out. So there’s going to be a lot of experimenting over time. Which is why your publisher, the biggest publisher, which isn’t dumb about business at all, agreed to do a simultaneous launch with you on the basis of your readers.

So publishers keep readers in mind, but they are selling to the booksellers who have certain demands and leverage and issues, except on e-books where there are a different set of factors with vendors and readers. Whereas self-publishing authors are dealing with just the readers, with a different relationship with the vendor booksellers, more of a stocking issue, and only one title or one author instead of 4,000 at a time. The business factors are different.

[…] Publishers often have these in the contracts, so you can’t write in your own world or the same genre while working on books for them. And usually they want first crack at anything you do write in the genre. So they can decide on their own sloooooww timeline whether or not they want to buy it. Good luck affording groceries while you wait. I have author friends who have held out and gotten them removed from contracts. It can be done. […]

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